PM strikes health pact

Julia Gillard
is set to strike a deal on health reform at the Council of Australian Governments meeting on Sunday, after Western Australia and Victoria won key ­compromises from Canberra.

A breakthrough on health after almost a year of stalemate would be a major fillip for the Prime ­Minister and allow the government to claim health as a promised reform it can now deliver.

A deal is likely after Canberra agreed the states could keep ­control of their GST funds, as long as 30 per cent is earmarked for health funding.

The original reform proposal required the states to hand over 30 per cent of GST revenue to the federal government. Ms Gillard put an amended proposal last week that instead would result in the state’s GST money being put into an independent pool, along with federal money.

As well as dropping this requirement, Canberra has moved to renew the focus on primary healthcare in the deal – rather than hospitals – with funding for more, smaller “Medicare locals" networks. These are networks of primary carers set up to interact with each other to ensure better co-ordinated patient care.

The Gillard government is also offering to bring forward funding for after-hours GP care to this year.

It appeared likely last night that some of the growth funding originally earmarked for the burgeoning cost of hospitals may be diverted to fund these new initiatives.

West Australian Premier
Colin Barnett
spoke to Ms Gillard yesterday morning, while the newly elected Victorian government also indicated last night it would look to do a deal after previously flagging serious ­concerns.

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“The critical issue for WA is that we talk about health and not about taking away a share of GST revenue of the states," Mr Barnett said.

“If the federal government concentrates on health, I believe they can achieve agreement on health and there can be a health deal."

The key points of the package that would have to be maintained were funding based on services performed, an efficient price on various health services and a commonwealth-state funding pool, he said.

“I would hope the commonwealth will abandon any idea of taking away the state’s GST and the state would pay into a fund for WA public health and the commonwealth will also pay into that fund," the Premier said.

“Now if we do that, then I think we can concentrate on actually improving health services, reducing wastage through bureaucracy and make sure our taxpayers’ dollars get to patients."

Ms Gillard said yesterday she expected to settle the deal based on principles of “equity and efficiency".

State budgets would be overwhelmed by the cost of healthcare in the long-term unless a new agreement was struck, she said.

Last week, The Australian Financial Review revealed Ms Gillard had warned the states that those that did not agree to bed down reforms would lose their share of $15 billion in new funding designed to have the federal government pick up the growing cost of state health budgets.

The $15 billion of growth funding – which has subsequently risen to more than $16 billion – is still in play as the central point of negotiation. The $16 billion funding would mean the federal government would eventually be funding 60 per cent of the state health budgets. Negotiations are continuing over whether the final figure will be as high as 60 per cent.

Responding to claims by the Victorian opposition that the state would have to pay back $411 million it had already received under the reforms if it junked the health deal, Victorian Health Minister
David Davis
gave his strongest indication yet that a compromise would be struck.

“Victoria and the commonwealth will negotiate an arrangement that is in the interests of Victorian patients," he said. “[We] are negotiating forward on a constructive outcome. Victoria and the commonwealth are both focused on the best outcomes for Victorian patients."

Victorian opposition health spokesman
Gavin Jennings
said any shortfall in funding stemming from a decision to tear up the deal would have to be made up to fulfil commitments to Victorians.